The transformation required
This final determination is underpinned by the expectation that Scottish Water will undergo the fundamental transformation necessary to deliver its part in the long-term vision set out in its Strategic Plan. Scottish Water should continually seek to deliver at a level that exceeds the expectations of its regulators and the customers and communities it serves.
The onus is now on Scottish Water to evidence that everything it does is for the benefit of customers (both now and in the long term) and to justify fully its investment needs. This approach is very different from that of previous regulatory control periods in that our expectation is that Scottish Water will evidence its progress on an ongoing basis to the customers and communities that it serves, and our reporting of their performance will reflect their success in doing so. This is at the heart of Ethical Business Practice (EBP).
Our Decision Papers and draft determination explained the approach that underpins Ethical Business Regulation (EBR) and set out our expectations of the EBP that is expected of Scottish Water. In summary, we expect Scottish Water to:
- take full ownership of enduring relationships with the customers and communities it serves;
- promote an open discussion of its purpose, aspirations and values;
- set out clearly – and in a way that is accessible to all – its current performance and plans for improvement;
- engage in regular and frank discussion of performance, recognising that performance expectations will always change and become more demanding;
- adopt a collaborative, timely and pro-active approach to meeting the needs and aspirations of its regulators, aiming to address their concerns even before they have had to ask; and
- embrace these challenges as an opportunity – and be seen to do so in a positive and constructive way.
At the same time the Commission is clear that it has an important role to be fair but frank in judging and evidencing its assessment of Scottish Water’s performance. It will support, where the evidence is good, Scottish Water’s plans for meeting the expectations of the customers and communities it serves.
As such, we anticipate that we will provide strategic commentary on performance, informed by the insights that we gain from stakeholders, customers and communities. Inherent within such an approach is a shift away from the traditional regulatory cycle, with the focus being much more on long-term planning and decision-making.
Work has already started jointly with Scottish Water to effect the transformation, including through the work with external innovative thinkers to identify improvements to the approach to appraisals which will underpin the move to better decision-making. We are also pleased to note that Scottish Water is leading on its engagement with customers and communities through the interim customer group and through the national conversation.
There are already signs that Scottish Water, the Commission and other stakeholders are benefiting from the opportunities that EBR and EBP provide, and we look forward to continuing to support Scottish Water as it seeks to make the necessary transformation within its organisation over the coming months and years.
Timeline and next steps
Our final determination takes into account the representations we received on the draft determination as the final stage in our Strategic Review process. Scottish Water must now decide by 8 February 2021 whether or not it will accept the final determination. It will publish its Scheme of Charges for 2021-22 before the end of February 2021. The timeline for the remainder of the Strategic Review of Charges is set out below.
Remaining Strategic Review milestones
|Scottish Water decides whether or not to accept the final determination||February 2021|
|Scottish Water submits its 2021 Scheme of Charges to the Commission for approval||February 2021|
|Scottish Water submits its 2021 Delivery Plan to the Scottish Ministers for approval||March 2021|
This Strategic Review of Charges and the final determination mark only the beginning of the transformative journey that the sector will need to make in order to transition to a sustainable sector.
As such, and given the progress to date, we have set out here our initial timetable for future action and the next Strategic Review (SRC27).
This will include an assessment of Scottish Water’s progress in delivering the requirements set out in this final determination. The extent of Scottish Water’s progress will have a direct bearing on our approach to SRC27.
Next key milestones
|Annual approval of Scottish Water’s Scheme of Charges||From February 2021|
|OECD Peer Review findings||Summer 2021|
|Scottish Water’s first draft of its Transformation Plan||Autumn 2021|
|Regular commentary on Scottish Water’s performance and transformation||From 2021|
|Develop our approach for SRC27||From the final quarter of 2021|
|Publish our methodology||Spring 2023|
|Publish information/consultation papers||From early summer 2024 to early 2026|
|Publish the draft determination||Beginning of June 2026|
|Publish the final determination||Beginning of October 2026|